Jun 16, 2010

If stores pay less for credit card use, will you?By Jayne O'DonellWausauDailyHerald.com

Congress is mulling changes to the fees and restrictions that banks and credit card companies can place on merchants that accept credit and debit cards, but the changes might not have as positive an effect on consumers as retailers have suggested.

Provisions being negotiated in the House and Senate as part of the financial reform package would require the Federal Reserve Board to determine what would be “reasonable and proportional” fees for debit card transactions, which are about 1 percent of the transaction. The bill would also allow retailers to offer discounts for cash, check or low-fee credit card purchases, and remove prohibitions on minimum purchases required for credit or debit purchases.

Mallory Duncan, the National Retail Federation’s general counsel, said consumer prices will go down if the fees are cut, though it might not be as apparent if the inflation rate rises. But it could mean prices don’t go up in the face of inflation, and there could be other benefits, he said.

“Stores that compete to have the lowest price are going to drop prices,” Duncan said. “If you grow market share by service, you might offer free shipping or free gift-wrapping.”

Stores will either “increase profits or increase customer service,” predicts Bill Hardekopf, CEO of the free consumer credit card website LowCards.com. “I don’t think consumers will notice a difference at the retail level.”

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